Hello Che,
Swing based client is not going to be obsolete so at least for ESR developments u can still use it as u were for lower versions of PI, but certainly for ID development like Mass VM, IFlows etc. u have to use NWDS.
But having said that, there are still few limitations in NWDS - ID perspective for instance u cannot use extended RD for idocs, u cannot delete SWCV entry while creating iflows - atleast till PI7.31 SP09 these points hold true, so in those cases u have to switch to swing based client or find other alternatives to do ur scenario.
So, IMO swing based client and NWDS should compliment each other and we can switch to anyone of them as per our needs...
Thanks
Amit Srivastava